First, congratulations are due to President Obama on his reelection and to Republicans on a strong House majority. Each has a different lesson to take from last night’s results. The president must recognize that his reelection was not a mandate for his policies, but rather an impressive tactical political feat that gives him a second chance to govern and lead the United States away from predictable financial disaster. Republicans have a political lesson to learn on the serious demographic challenges they face moving forward.

Any celebration for President Obama is short-lived, however, as he returns to Washington facing a $600 billion fiscal cliff that must be dealt with before the end of the year. Or, alternatively, he can resume his second term with a self-inflicted recession.

Any mandate the president believes he has on raising taxes is equally strongly felt in the other direction by a House Republican majority that was returned despite his victory. The president must begin to work with the same partisan configuration in Congress that he has had for the past two years. However, even with the same cast of characters, the future of our country demands that this movie have a different ending. The most important thing for the president to do now is reach out to those who matter: Speaker Boehner, Majority Leader Reid, Minority Leader McConnell, and develop a path forward to avert the fiscal cliff.

Partisan posturing aside, there are real policy challenges that can no longer be put on the back burner. Global markets, and rating agencies in particular, will want to see real improvement in the fiscal picture in 2013. After all, if it can’t be done in 2013, how will it happen before 2017 — which is far too late? With the president’s reelection, the prospect of transformational changes to Medicare, Medicaid, the Affordable Care Act, and taxes are far less likely. Instead, what we can project from last night is a future of incremental reforms. I expect he will go small-ball on tax reform and entitlement reform, and continue to avoid the worse of our fiscal woes without really fixing the problem.

In 2010, the president mistakenly disregarded the bipartisan solutions presented by Simpson-Bowles. Last night was the president’s last election. While history has given us no reason to believe that he will move to the middle and actually begin to govern, we can hope that without an election in his future, he will take this opportunity to do just that.

Republicans can look to last night and see that President Obama won 40 percent of the white vote and more than 300 electoral votes. His coalition was broad. Over the longer term, the Republican party faces serious demographic problems, which they must and will overcome.

But right now, focus must remain on the fiscal cliff. President Obama and leaders in Congress return to Washington facing the same fiscal challenges that we have had for years with no changes to the political makeup.